Cal­i­for­nia Med­i­caid rul­ing a cau­tion­ary tale for Texas

Austin American-Statesman - - BALANCED VIEWS - FROM THE RIGHT Mon­day Tues­day Wed­nes­day Thurs­day Wohlge­muth is ex­ec­u­tive di­rec­tor of the Cen­ter for Health Care Pol­icy at the Texas Pub­lic Pol­icy Foun­da­tion. She served 10 years in the Texas House of Rep­re­sen­ta­tives. Fri­day Satur­day Sun­day


ap­peals court in Cal­i­for­nia ruled last week that the state may cut re­im­burse­ment rates to doc­tors, phar­ma­cies and other providers in its Med­i­caid pro­gram, Medi-Cal, by as much as 10 per­cent. The rul­ing comes as Cal­i­for­nia pre­pares to ex­pand the pro­gram in com­pli­ance with Oba­macare, which could add some 2 mil­lion peo­ple to the Medi-Cal rolls by 2014 — a 25 per­cent ex­pan­sion.

Mean­while, the num­ber of physi­cians and other providers who will treat Medi-Cal pa­tients has been steadily drop­ping in Cal­i­for­nia for years due to poor re­im­burse­ment rates, which are among the low­est in the na­tion. Providers say that if rates are cut any fur­ther, they won’t even cover the cost of treat­ment, and physi­cians will be treat­ing Med­i­caid pa­tients at a loss.

The cuts are needed, Cal­i­for­nia law­mak­ers say, to fill a $1.9 bil­lion bud­get deficit next year. But what rate cuts will mean for the low-in­come fam­i­lies en­rolled in Medi-Cal is an even harder time get­ting rea­son­able ac­cess to health care. When mil­lions more are forced into the pro­gram as Oba­macare takes ef­fect, many of them could be hard-pressed to find a doc­tor at all.

This is an all too fa­mil­iar story in Cal­i­for­nia, where law­mak­ers have been cut­ting Med­i­caid pay­ments while ex­pand­ing pro­gram el­i­gi­bil­ity for a long time. Cal­i­for­nia’s Med­i­caid pay­ment rate is cur­rently 48th-low­est in the na­tion, only about half the Medi­care rate, which it­self is sig­nif­i­cantly lower than what pri­vate in­surance pays. The state doesn’t track physi­cian par­tic­i­pa­tion in its Medi-Cal pro­gram, but a sur­vey by the Univer­sity of Cal­i­for­nia, San Fran­cisco, found that while most Cal­i­for­nia physi­cians are ac­cept­ing new pa­tients, only about 57 per­cent will ac­cept Medi-Cal pa­tients. That per­cent­age will go down as re­im­burse­ment rates go down, leav­ing mil­lions of poor Cal­i­for­ni­ans with even worse ac­cess to health care.

Cal­i­for­nia’s reck­less­ness with Med­i­caid is a cau­tion­ary tale for Texas, where state law­mak­ers may face a bud­get short­fall many times greater than Cal­i­for­nia’s. For the up­com­ing 2014-15 bi­en­nium, Texas could be as much as $13 bil­lion short. Most of that comes from the grow­ing cost of Med­i­caid and the loom­ing im­ple­men­ta­tion of Oba­macare — even with­out Med­i­caid ex­pan­sion. Texas spent $28 bil­lion in state funds on Med­i­caid in 2011 and the pro­gram now ac­counts for a quar­ter of the state bud­get. Med­i­caid is pro­jected

Kath­leen Parker

David Brooks

Ross Douthat

Ramesh Ponnuru to keep grow­ing at an alarming rate, pro­vid­ing a de­clin­ing qual­ity of care and con­sum­ing an ever-larger share of the state bud­get.

Be­cause fed­eral rules leave states with few op­tions to con­trol costs, the temp­ta­tion for Texas is to do what Cal­i­for­nia is do­ing and cut re­im­burse­ment rates, like the 1 per­cent rate cut the state ap­proved in 2010. This might help fill the bud­get hole in the short term, but over time it will fur­ther shrink the num­ber of par­tic­i­pat­ing doc­tors and put off needed re­forms. Right now, less than a third of Texas physi­cians are will­ing to ac­cept new Med­i­caid pa­tients — a worse rate than in Cal­i­for­nia — and fur­ther cuts to re­im­burse­ment rates will only ex­ac­er­bate the prob­lem.

In­stead, Texas needs to do two things: re­main stead­fast in its de­ter­mi­na­tion not to ex­pand Med­i­caid in ac­cor­dance with Oba­macare, and em­bark on fun­da­men­tal Med­i­caid re­form to en­sure cur­rent en­rollees con­tinue to have ac­cess to care and providers con­tinue to par­tic­i­pate.

Last­ing re­form must ad­dress the flawed struc­ture of Med­i­caid, which re­im­burses providers af­ter the fact. In­stead of paying physi­cians a frac­tion of what they typ­i­cally get from pri­vate in­sur­ers, the state needs to im­ple­ment a slid­ing scale pay­ment sys­tem that helps Med­i­caid en­rollees pur­chase their own health in­surance.

This would en­sure Med­i­caid pa­tients have ad­e­quate and timely ac­cess to care, and would get the state out of the busi­ness of paying providers. By giv­ing en­rollees an ac­tive role in their care and elim­i­nat­ing it­self as a mid­dle­man, the state could be­gin to con­trol growth of Med­i­caid and re­duce fraud­u­lent billing that has plagued the sys­tem.

This kind of fun­da­men­tal re­form, how­ever, can only suc­ceed in the con­text of a fed­eral block grant of Med­i­caid funds. State and fed­eral law­mak­ers need to come to­gether and push Washington for the flex­i­bil­ity to trans­form the cur­rent sys­tem into a sus­tain­able pro­gram that en­sures timely, qual­ity care for the state’s poor­est res­i­dents.

The alternative to re­form is more of the same: in­cre­men­tal cuts to providers and, over time, fewer providers. Any­one can see where Texas will end up with­out fun­da­men­tal re­form. All you have to do is look at Cal­i­for­nia.

Amity Shlaes Charles Krautham­mer

Ge­orge Will Amity Shlaes will re­turn.

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